Why Canadian Zak Pashak decided to make bikes in Detroit

Zak Pashak wouldn't describe himself as a "bike guy." And, until recently, he had never been to Detroit. So when the 30-year-old owner of a live music club in Calgary announced his intention to open a bicycle factory in Detroit, his friends and family were surprised.

To clarify: They were surprised, yes, but not shocked. Mr. Pashak is not the type of entrepreneur to hesitantly wade into a new project. "I'm not exactly a patient person," he explained in an interview. And that quality − to ignore barriers and just jump in − is one reason why he chose Detroit instead of his native Canada.

"Detroit is attracting risk takers and a lot of creative people right now," Mr. Pashak says. "It has a Gold Rush feeling to it." Mr. Pashak's career, from bar owner to music festival founder to bike manufacturer, suggests that Canada could learn a few things from the Motor City about supporting small business.

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Mr. Pashak, whose mother founded the left-leaning magazine Alberta Views and whose father was a rare NDP MLA in Alberta, has never been one to quietly follow the rules. At the University of Alberta he began by studying psychology then switched to philosophy, but it was campus radio that grabbed his attention. "I saw how crucial it was to a city to have an active art scene. It made me feel like Edmonton was important," he says. His attendance at school suffered and he eventually dropped out.

When he returned to Calgary, Mr. Pashak's ideas about the arts solidified. "People were proud of their local art scene and so they became proud of their city and that made them more active and engaged in the city," he says. So he decided to open the live music bar called Broken City.

Community is a theme that runs through Mr. Pashak's career, as he built Broken City into a venue for independent local music in Calgary and established a second successful venue, the Biltmore Cabaret, in Vancouver in an effort to create a western Canada touring circuit.

With Broken City thriving, Mr. Pashak wanted to start a music festival that would promote all venues in downtown Calgary. In 2007, Sled Island was born.

But the experience of establishing the festival was initially frustrating. "I didn't kiss the right rings when I started that festival and I suffered for it," he recalls. "I had some confrontations. Sled Island was disruptive."

Mr. Pashak also encountered barriers with the Biltmore in Vancouver. Eight months after pouring $500,000 into renovating the space, city inspectors shut down the bar for being over capacity. In most cases, such a first-time offense results in a fine.

However, the Biltmore's liquor license suspension was upheld after a fire inspector took issue with the width of the venue's stage, which had previously been approved. The Biltmore was closed for nearly two weeks before Mr. Pashak went public and city counsellors intervened, and he became a symbol of how red tape stifled Vancouver's nightlife. "I had invested so much money in something I thought was adding to the culture of Vancouver," he said at the time. "The tragedy was that I wasn't able to trust the city I was investing in." Mr. Pashak notes that Vancouver has improved in this regard significantly in the past five years.

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Mr. Pashak believed he had learned valuable lessons about how the bureaucratic culture in Canada impacted businesses. So he ran for city council in Calgary in 2010. He lost, and then acted on an impulse and bought a plane ticket to Detroit to explore his interest in the history of the city.

There he found a place in the middle of an exciting transition. "People want to see positive change in Detroit, so they are deeply invested in what is happening there. They want to hear new ideas," he says. "It's a great atmosphere for business."

And Mr. Pashak had an idea. When he went bicycle shopping in Calgary, he couldn't find one that suited him. He wanted something affordable, simple and low-maintenance. He wanted to be able to hop on a bike without having to know how to change a tire. Yet, the bike had to be beautiful.

So when he started to get restless with his live music business, he decided to do something about this hole in the market.

With cycling becoming more popular, he figured that other consumers would be looking for a straightforward bike like he was. His company, Detroit Bikes, designed a prototype of a three-speed bike with a curved crossbar that brings to mind a previous era of cycling. He plans to sell the bike, which comes only in black, for about $500. If all goes according to plan, the factory will produce 100 bikes per day.

He has high hopes for doing business in Detroit.

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He has found that it is easier to access decision makers in government, for example. "There is a lot of support for entrepreneurship. There is a sense of teamwork and cameraderie. Things happen a little easier."

And in Detroit, Mr. Pashak has found a business environment that is much more open to new people with new ideas. "There are fewer barriers to entry. I've been welcomed," he says. "People in Detroit are unsatisfied with the status quo, so disruption is met with enthusiasm. In Canada we're more complacent."

Of course, a large incentive to set up shop in Detroit instead of Calgary or Vancouver is its affordability. Mr. Pashak was able to buy a 50,000-square-foot warehouse (previously used for making signs) for $190,000 in a bad neighbourhood. And that is attracting many like-minded entrepreneurs.

Still, there are downsides to doing business in the U.S.

Although many believe that there is less bureaucracy to deal with there, Mr. Pashak found that not to be the case. "People think that Canada is more burdensome with paperwork, but I have just as much paperwork and taxes to deal with here, if not more," he says.

And despite the affordability of Detroit, the lack of universal health care is a concern to Mr. Pashak. "People say that having health care here would be bad for business, but it's not," he says. "I provide health care for all of my employees and it's expensive.

Mr. Pashak plans to start manufacturing bicycles next year. As always, his goal is ambitious. "I want to prove that it's possible to manufacture a great product in North America."

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